Toilet provision key to Modi’s success in India

As the blog discussed last week, it seems that a new type of leader is starting to emerge in some of the world’s major countries. Premier Narendra Modi in India, like President Xi Jinping in China, seems to be focused on achieving change – and not just on staying in power for its own sake.

“By 2022, no Indian should be without a home, without clean water, without electricity and without a toilet”.

This could be very good news for India, which is set to have the world’s largest population within 20 years, due to having higher fertility rates than China. As the chart above shows, however, it only has a limited time period in which to benefit from this Demographic Dividend:

Its fertility rate has already fallen 60% since 1950, from around 6 babies/woman to just 2 babies/woman today (green shading)

This is below the replacement level of 2.1 babies/woman, and means India’s population will start to decline if this trend continues

Life expectancy has increased 80% over the same period, from 36 years in 1950 to 65 years today

This means that India will follow China into becoming an ageing society in due course

India is, of course, also one of the world’s poorest countries. Its GDP/capita of just $1500 puts it in 140th place in the world. By comparison, China is 83rd with GDP/capita of $6700. So Modi’s focus has to be relevant to its economic wealth, if it is to achieve anything meaningful.

The blog’s colleague, John Richardson, has written an excellent summary of the challenges and opportunities facing Modi in India. He rightly argues that “a war on poverty – especially extreme poverty” must be the key target.

“This would mean many more children would be healthy-enough to attend school on a regular basis. In parallel major improvements in the education system must also take place.

“Key to alleviating poverty will be improving access to safe drinking water, sanitation and safe and plentiful supplies of food. This is where the chemicals industry can play a critical role in making this happen. If more and more children are able to attend good schools, they will grow up to be a little richer than their parents. This would translate into much greater domestically-derived growth, which will happen regardless of India’s success or failure in export markets.”

He is clearly right. Simple metrics are what is needed to focus activity in the right direction. The fact that half of India’s population currently have no access to a toilet, and instead have to defecate in fields, is one such target that anyone can appreciate.

600 million Indians currently have to defecate in the fields, or wherever they can find an available place.

They total 60% of the world total of residents who have to live without toilets

The previous government spent just 0.1% of GDP on water and sanitation provision, less even than Bangladesh

This is why Indian villages are thought to be among the unhealthiest communities in the world. The rewards would be immense, as Bloomberg notes:

“At stake is $54bn a year in economic costs in India, equivalent to about 3% of GDP in Asia’s third-biggest economy and a quarter of global losses from poor sanitation. Open defecation contaminates ground water, spreads disease and exposes women to sexual assaults, including two girls in India who were raped and hanged from a tree last month after squatting in a field near their homes.”

Change is, of course, difficult to achieve. As the great Italian writer Nicolo Machiavelli wrote in his most famous work,’ The Prince’

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.

“This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them. Thus it happens that whenever those who are hostile have the opportunity to attack they do it like partisans, whilst the others defend lukewarmly.”

We will know whether Modi is serious about reform, once today’s honeymoon period ends, if we start to find that he is being seriously attacked by people who have done well under the old conditions.

The fact that something is difficult, does not mean it should not be attempted. Companies who focus on the opportunities in India, from the provision of safe drinking water and sewage, or better food packaging, are likely to be the Winners for the future.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.

The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such as oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.

Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.